Domain Names vs. Trademarks

The conflict between Internet domain names and trademarks is intensifying, while experts say there just aren't enough domain names to go around.

Attorney Mark Radcliffe -- a partner in the Palo Alto, Calif., law firm of Gray Cary Ware & Freidenrich -- is the author of the policy governing the issuing and rescinding of Internet domain names, a policy that has thrust him and his client, Network Solutions Inc. (NSI) of Herndon, Va., into an uncomfortably intense spotlight.

NSI has been responsible for registering Internet domain names since 1993 under an exclusive contract with the National Science Foundation. It is collecting millions of dollars annually from that service, charging $50 a year to register and retain a name. Business from the nearly 500,000 registered names has proved to be so lucrative for NSI that it is now planning to become a publicly traded corporation.

But NSI and Radcliffe have a problem. There's a conflict between domain names and trademarks, both of which are jealously and strenuously protected by their owners. Radcliffe, a specialist in trademark, patent and copyright law, decided that NSI should recognize trademark owners' claims to certain domain names, even though under trademark law domain names may not be violating a trademark. The policy, initiated in July 1995 and revised for the third time in September, has incensed domain name owners and ironically resulted in the very nightmare NSI was trying to avoid -- being named in numerous lawsuits.

DOMAIN NAMES
Domain names essentially tell Internet users where an individual or company is located in cyberspace. There are two methods for categorizing the addresses -- one by geography, and the other by organization. The latter are the ones in demand, because they are shorter, which means they're easier to remember and faster to type into a computer. Those names generally are a combination of the owner's business designation, such as Government Technology or SourceLaw, followed by a period (called a dot in Internet parlance) and three letters -- govtech.net or sourcelaw.com.

The three letters signal what kind of organization it is -- "com" for commercial entities, "gov" for government, "edu" for educational institutions, "mil" for military, "org" for nonprofit organizations and "net" for groups that don't fit into the other categories. But "com" is where the trademark battle is being waged because the Internet, which began 27 years ago as a cooperative effort between the military and its university researchers, is in the midst of excited commercialization. Companies and corporations, large and small, are rushing to NSI to register domain names, usually their own trademarked name, often to find that someone already has it.

BASIS OF CONFLICT
"Essentially there aren't enough domain names," said Radcliffe, adding that he feels a recent recommendation by the Internet Assigned Numbers Authority (IANA) -- that companies other than NSI begin issuing domain names -- is a good idea, and he supports it. IANA is the official coordinator for the assignment of Internet protocols and domain names. "IANA has recognized it as a problem for a number of months," he said.

IANA, NSI, Radcliffe and nearly everyone else has recognized the problem, although there's bitter debate over who caused the trouble, and whether IANA's suggestion will fix it. "The new NSI policy continues NSI's role, unique in modern commerce, as a parallel quasi-judicial system," said Carl Oppedahl of Oppedahl & Larson, a New York intellectual property lawyer who has sued NSI over its policy. "In all other aspects of trademark law, a trademark owner gets its remedies from a court or not at all.

"NSI offers itself as a sort of hired gun," Oppedahl said, "providing free legal services to trademark owners, giving them two choices where preliminary relief regarding domain names is concerned -- the normal court and NSI's quasi-court. In normal court, to avoid losing a domain name, one need merely avoid infringing any trademarks. In NSI's quasi-court, lack of infringement is no defense."

G. Gervaise Davis of Davis & Schroeder in Monterey, Calif. -- who represents a slew of high-technology firms in intellectual property matters and also has sued NSI over the domain name policy -- accused NSI and Radcliffe of blatantly favoring trademark owners over domain name holders. "The NSI policy is encouraging unprincipled people to do unlawful acts," he said. "Trademark owners acting in bad faith are claiming domain names from people who can't afford to litigate these cases."

Radcliffe, while denying any bias toward the trademark community, conceded that NSI felt it needed to protect the legitimate rights of trademark owners and construct a shield for itself against potential trademark infringement suits. "We're not favoring trademark owners," he said. "We recognize the ambiguity of domain names and trademarks. Trademark law is inadequate in this situation. Trademark law in the U.S. is based on multiple people using the same mark simultaneously, but there's only one domain name," he said.

"PIRATING" NAMES
Under trademark law, more than one company can have a trademark on the same name, as long as they aren't selling similar products or services, or competing in the same geographic market. But on the Internet, it's a different story, as several companies have learned. McDonald's Corp. came face-to-face with the Internet for the first time when it was forced to deal with a New York journalist who had registered mcdonalds.com as part of an article he wrote for Wired magazine. McDonald's acquired the name in exchange for donating computers to a public school.

Sprint Communications Corp. tried to pull a fast one on arch-competitor MCI Telecommunications by registering mci.com. MCI protested and now owns the domain name.

Those and other instances of trademark "pirating," as trademark owners call it, prompted NSI to alter its first-come-first-served policy to allow a trademark holder to challenge the domain name holder.

Following a challenge, NSI notified the domain name holder that it could relinquish the name voluntarily, take the matter to court, or provide proof of a trademark on the name to NSI within 30 days, or the name would be rescinded and placed on hold until the dispute was settled.

Although NSI would take no action if the domain name holder sued the challenger, they required the name holder to post an indemnification bond to protect NSI in case the trademark holder lost and decided to include NSI in an infringement suit. The trademark holder was not required to post any indemnity bond.

If both the domain name holder and the challenger had trademarks on the name, which is permitted under trademark law, then the domain name was awarded to the existing holder of the domain name. If the domain name was registered prior to the trademark holder registering the mark, then the domain name was retained by its owner.

NEW POLICY
The changes introduced in the new policy in September include:

NSI will accept a domain name owner's trademark only if it was registered before the date of NSI's request for proof of ownership or any third party's notification of a dispute to the owner, whichever is first. Under the old policy, a challenged domain name holder could, and often did, quickly register a trademark on the name in a foreign nation.
Trademark owners are required to notify domain name owners that their registration and use of the domain name violates the legal rights of the trademark holder before requesting NSI to take action.
A bond is no longer required by the domain name owner, and indemnification for legal fees is eliminated.
In those instances when either the domain name owner or the trademark holder file suit against the other prior to the domain name being placed on hold, NSI will not place the domain name on hold, and instead will await and abide by the court's decision without being named as a party to the suit.
But the changes didn't stop the criticism or the lawsuits, so IANA recommended that new domain name categories be created, which has prompted an avalanche of suggestions. Those include "bus" for business and "tm" for trademark.

"The bottom line is there aren't enough domain names to go around," said Radcliffe. "However we change the policy, it won't affect the number of domain names". Making more domain names should be the focus of people, and though offering new top-level domain names might be confusing, it's on the road to a solution. "Although I wonder how much all of this has to do with the money at stake," he added.

James Evans is the editor of SourceLaw, a bimonthly electronic newsletter that discusses government and legal resources on the Internet. Three-issue trial subscriptions are available by sending an e-mail message to < jimevans@sourcelaw.com >.